• Georgia Car Wash May Face $110 Million in Junk Fax Penalties
  • April 16, 2004
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • As first chronicled in a report by ADLAW by Request, the Georgia Court of Appeals has ruled that recipients of junk fax advertisements may form a class and sue the offending sender, overturning a trial court's decision not to certify as a class 73,500 recipients of unsolicited faxes from Carnett's, a metro Atlanta car wash. The car wash will appeal the decision.

    Former Gov. Roy E. Barnes argued on behalf of the putative class, asserting that the trial court erred by deviating from the standards set by Hooters of Augusta v. Nicholson, 245 Ga. App. 363(2000). There, the appeals court ruled that class certification was proper where the restaurant had sent 7,825 unsolicited faxes. Ultimately, a $12 million verdict was entered against Hooters.

    The trial court had held that the faxes violated the Telephone Consumer Protection Act of 1991. However, recipients should have sued in small claims court. The panel disagreed and outlined the requirements for class certification: "numerosity" and "typicality." To determine the size of the proposed class, mini-hearings would be required to see if each potential plaintiff had invited or given permission for Carnett's advertisement. Second, regarding commonality of the legal claim, "there is no evidence that Carnett's ever received permission to send any of the advertisements. More importantly, while the question of whether the advertisements were unsolicited is certainly critical to this case, we disagree with the trial court's conclusion that it somehow defeats class certification. "

    Carnett has impleaded the advertiser, Sunbelt. It claims that it was unaware that sending unsolicited faxes was against the law. "What really needs to happen is to put those marketers out of business," Carnett's attorney claims. "The law was not designed to put car washes out of business."

    Not so fast, says plaintiffs' counsel, asserting that compliance with the law is a non-delegable duty: "When a business hires an agent, they're responsible for the conduct of their agent," he said. "In this instance, the business hired a company for the specific purpose of sending junk faxes, and that is illegal ... One cannot hire an agent for the specific purpose of breaking the law and then avoid responsibility by saying, 'My agent said it was OK.'" Further, "Congress knew that the companies that did this were mostly fly-by-night, and that's why they put the liability and responsibility on the folks who hire them-to make sure they didn't break the law," Barnes said.

    Why This Matters: The awards in cases under the do not fax rules are increasing at substantial rates. This matters not only because of the chilling effect on fax marketing, but also on the spillover such views will have on other "do not" initiatives, including do not mail, do not spam, and do not call. The trend of limiting marketers' ability to reach consumers by methods historically accepted is an alarm every marketer needs to heed.